Budgeting 101 (Coderre) · PDF file 2018. 12. 3. · GFOA BEST PRACTICES Mandatory...

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Transcript of Budgeting 101 (Coderre) · PDF file 2018. 12. 3. · GFOA BEST PRACTICES Mandatory...

  • A S S O C I A T I O N O F T O W N F I N A N C E C O M M I T T E E S N O V E M B E R 3 , 2 0 1 8

    J O H N W . C O D E R R E , T O W N A D M I N I S T R A T O R N O R T H B O R O U G H , M A

    Budgeting 101 A Guide to Best Practices

  • Overview

    GFOA Distinguished Budget Award ¡ Best Practices in Public Budgeting

    What information to look for and where to find it ¡ The anatomy of a good budget

    Questions you should be asking

  • Financial Policies

    FTMS & Financial Forecast

    Capital Improvement

    Plan

    Distinguished Budget Award Annual Budget Document

    ü Debt ü Free Cash ü Investment ü Financial Reserves

    ü Capital Investment ü Enterprise Funds ü Fees/Cost Recovery ü Independent Audits and

    Financial Reporting

    ü Six-Year Project Planning

    ü Equipment ü Buildings ü Infrastructure ü Pavement

    Management

    ü Financial Indicators

    ü 10-Year Trend Analysis

    ü 5-Year Financial Forecasts

    ü Bond Ratings

  • Overview

    There is no mandated format for budget documents Every town is different in terms of its formal

    structure, culture and informal practices There are no right or wrong approaches, but there

    are best practices that can provide common ground for those involved in the budget process

  • GFOA BEST PRACTICES

    Government Finance Officers Association (GFOA) Distinguished Budget Award ¡ Only national awards program in governmental budgeting ¡ Promotes best practices in public budgeting ¡ Focus on information, transparency and accountability ¡ Provides independent review and critique of a municipality’s

    budget documents ¡ Only good for one year so there is a focus on continuous

    improvement

  • GFOA BEST PRACTICES

    Evaluation criteria is based upon the four essential purposes a budget must serve as: ¡ Policy Document—identifies the Town’s financial goals,

    objectives and guiding policies; ¡ Financial Plan—presents the Town’s current financial

    condition, stating assumptions and projecting where things are headed based upon those assumptions;

    ¡ Operations Guide—describes the municipal services and operations, measuring their efficiency and effectiveness;

    ¡ Communications Device—articulates the Town’s challenges and priorities, goals and objectives.

  • GFOA DISTINGUISHED BUDGET AWARD

    Three reviewers somewhere across the country review your budget based upon twenty-seven different evaluation criteria

    Reviewers must rate your budget as “Proficient” in the various categories to qualify

    Failure to be rated as proficient in any one of the fourteen mandatory criteria results in disqualification. These fourteen requirements represent the minimum standards of a quality budget document and process.

  • GFOA BEST PRACTICES

    Mandatory Criteria #1: The document shall include a table of contents that makes it easier to locate information in the document. ¡ Detailed indices preceding individual sections can be helpful,

    but they are not a substitute for a single comprehensive table of contents. Care should be taken in developing budget or electronic page number references in the table of contents, so they agree with the related page numbers in the budget document or electronic submission.

  • GFOA BEST PRACTICES

    TABLE OF CONTENTS Title page listing Board of Selectmen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i Citizen’s Guide to the Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii Town Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv Community Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

    Town Administrator’s Budget Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-18

    SECTION 1—BUDGET SUMMARIES Balanced Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2 Revenue Budget Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 1-5 Expenditure Budget Summaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-11

    SECTION 2—GENERAL ADMINISTRATION Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Board of Selectmen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6 Town Administrator’s Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7 Economic Development (Community Development) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-8 Town Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-8

  • GFOA BEST PRACTICES

    SECTION 8—ENTERPRISE FUNDS

    Solid Waste Enterprise Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 Water Division Enterprise Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5 Sewer Division Enterprise Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5

    SECTION 9—CAPITAL IMPROVEMENT PROGRAM

    Transmittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-7 Capital Projects Flow Chart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-12 Capital Improvement Program (summary of projects requested) . . . . . . . . . . . . . . . 9-13 Project Detail by Functional Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19 Financial Planning Committee Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-63

    APPENDICES A. Financial Management Policies & Objectives B. Fund Descriptions and Balances C. Financial Trend Monitoring Report D. Glossary of Terms

  • GFOA BEST PRACTICES

    Mandatory Criteria #2: The document shall include a budget message that articulates priorities and issues for the upcoming year. The message should describe significant changes in priorities from the current year and explain the factors that led to those changes. The message may take one of several forms (e.g., transmittal letter, budget summary section). ¡ This criterion requires a summary explanation of key issues

    and decisions made during the budget process. The budget message also should address the ramifications of these decisions. It is recommended that the total amount of the budget be included in the budget message.

  • Northborough’s Budget Message includes: ¡ Goals of the upcoming budget ¡ Budget in brief ¡ Summary analysis of the Town’s financial condition & outlook ¡ Position FTE summary table for entire organization ¡ Summary of the Capital Budget Expenditures ¡ Previous year’s accomplishments ¡ Summary of major upcoming issues and projects

  • Budget in Brief EXPENDITURES

    FY2018 Budget

    FY2019 Proposed Variance

    % Change

    General Government (Town) $20,902,493 $21,634,080 $731,587 3.50% Schools

    Northborough K-8 $23,445,017 $24,265,593 $820,576 3.50% Algonquin Reg. HS 9-12 $10,406,326 $11,322,989 $916,663 8.81%

    Algonquin Debt Exclusion $660,574 $610,774 -$49,800 -7.54% Assabet Valley $741,661 $612,406 -$129,255 -17.43%

    Assabet Valley Debt $151,232 $145,316 -$5,916 -3.91%

    Warrant Articles Reserve Fund $175,000 $175,000 $0 0.00%

    Free Cash Capital Projects $1,497,000 $1,360,000 -$137,000 -9.15% Transfer to Stabilization $200,000 $200,000 $0 0.00%

    Transfer to OPEB Trust $500,000 $500,000 $0 0.00%

    Zeh School Debt $389,854 $371,447 -$18,407 -4.72% Colburn St. Debt Service $66,990 $64,680 -$2,310 -3.45% Library Debt Service $383,985 $373,605 -$10,380 -2.70% Senior Center Debt Service $422,195 $409,145 -$13,050 -3.09% Lincoln Street Debt $1,124,675 $1,100,275 -$24,400 -2.17% Other Funds $880,367 $967,828 $87,461 9.93% Adjustments -$313,479 $313,479 -100.00% Subtotal General Fund $61,633,890 $64,113,138 $2,479,248 4.02%

    Water Enterprise Funds $2,436,381 $2,496,718 $60,337 2.48% Sewer Enterprise Fund $2,051,028 $2,132,715 $81,687 3.98% Solid Waste Enterprise Fund $792,830 $811,839 $19,009 2.40% Subtotal Enterprise Funds $5,280,239 $5,441,272 $161,033 3.05%

    TOTAL ALL FUNDS $66,914,129 $69,554,410 $2,640,281 3.95%

  • GFOA BEST PRACTICES

    Mandatory Criteria #3: The document should provide an overview of significant budgetary items and trends. An overview should be presented within the budget document either in a separate section (e.g., executive summary) or integrated within the transmittal letter or as a separate budget-in-brief document. ¡ The intent of this cri